DEPP 2 Statutory notices and the allocation of decision making

The circumstances in which the warning notice and decision notice procedure apply are set out in DEPP 2 Annex 1.

The circumstances in which the supervisory notice procedure apply are set out in DEPP 2 Annex 2.

DEPP 2 Annex 1 and DEPP 2 Annex 2 identify the provisions of the Act or other enactment giving rise to the need for the relevant notice, and whether the decision maker is the RDC or FCA staff under executive procedures in each case.

FCA staff responsible for the taking of a statutory notice decision under executive procedures may refer the matter to the RDC for the RDC to decide whether to give the statutory notice if:

1. (1)

   the RDC is already considering, or is shortly to consider, a closely related matter; and

2. (2)

   the relevant FCA staff believe, having regard to all the circumstances, that the RDC should have responsibility for the decision. The relevant considerations might include:

   1. (a)

      the desirability of consistency in FCA decision making;

   2. (b)

      potential savings in the time and cost of reaching a decision;

   3. (c)

      the factors identified in DEPP 3.3.2 G as relevant to an assessment of whether a decision should be regarded as straightforward.

If a statutory notice decision is referred to the RDC which would otherwise be taken by executive procedures in accordance with DEPP 2.1.4G, the RDC will follow the procedure as set out at DEPP 3.2.

If FCA staff consider that action requiring a warning notice or first supervisory notice is appropriate, they will recommend to the relevant decision maker that the notice be given.

For first supervisory notices, the FCA staff will recommend whether the action should take effect immediately, on a specified date, or when the matter is no longer open to review (see DEPP 2.2.5 G).

The decision maker will:

1. (1)

   consider whether the material on which the recommendation is based is adequate to support it; the decision maker may seek additional information about or clarification of the recommendation, which may necessitate additional work by the relevant FCA staff;

2. (2)

   satisfy itself that the action recommended is appropriate in all the circumstances;

3. (3)

   decide whether to give the notice and the terms of any notice given.

If the FCA decides to take no further action and theFCA had previously informed the person concerned that it intended to recommend action, the FCA will communicate this decision promptly to the person concerned.

A matter is open to review (as defined in section 391(8) (Publication) of the Act) (in relation to a supervisory notice which does not take effect immediately or on a specified date) when:

1. (1)

   the period during which any person may refer a matter to the Tribunal is still running; or

2. (2)

   the matter has been referred to the Tribunal but has not been dealt with; or

3. (3)

   the matter has been referred to the Tribunal and dealt with but the period during which an appeal may be brought against the Tribunal's decision is still running; or

4. (4)

   such an appeal has been brought but has not been determined.

If a decision maker is asked to decide whether to give a decision notice or second supervisory notice, it will:

1. (1)

   review the material before it;

2. (2)

   consider any representations made (whether written, oral or both) and any comments by FCA staff or others in respect of those representations;

3. (3)

   decide whether to give the notice and the terms of any notice given.

Notwithstanding DEPP 2.3.1G(2), FCA staff under executive procedures who are asked to decide whether to give a decision notice or second supervisory notice will consider oral representations only in exceptional circumstances where they determine that prohibiting oral representations are likely to impact on the fairness of the decision. This may include (but is not limited to) circumstances where:

1. (1)

   the subject of the decision notice or second supervisory notice is not reasonably able to make written representations due to relevant personal circumstances; and/or

2. (2)

   oral representations are required due to the urgency or complexity of the matter to be decided.

If the FCA receives no response or representations within the period specified in a warning notice, the decision maker may regard as undisputed the allegations or matters in that notice and a decision notice will be given accordingly. A person who has received a decision notice and has not previously made any response or representations to the FCA, may nevertheless refer the FCA's decision to the Tribunal.

If the FCA receives no response or representations within the period specified in a first supervisory notice, the FCA will not give a second supervisory notice. The outcome depends on when the relevant action took or takes effect (as stated in the notice). If the action:

1. (1)

   took effect immediately, or on a specified date which has already passed, it continues to have effect (subject to any decision on a referral to the Tribunal); or

2. (2)

   was to take effect on a specified date which is still in the future, it takes effect on that date (subject to any decision on a referral to the Tribunal); or

3. (3)

   was to take effect when the matter was no longer open for review, it takes effect when the period to make representations (or the period for referral to the Tribunal, if longer) expires, unless the matter has been referred to the Tribunal.

In exceptional cases, the decision maker may permit representations from a person who has received a decision notice (or a second supervisory notice) or against whom action, detailed in a first supervisory notice, has taken effect, and shows on reasonable grounds that he did not receive the warning notice (or first supervisory notice), or that he had reasonable grounds for not responding within the specified period. In these circumstances, the decision maker may decide to give a further decision notice (or a written notice or a supervisory notice).

Under section 388(3) of the Act, following the giving of a decision notice but before the FCA takes action to which the decision notice relates, the FCA may give the person concerned a further decision notice relating to different action concerning the same matter. Under section 388(4) of the Act, the FCA can only do this if the person receiving the further decision notice gives its consent. In these circumstances the following procedure will apply:

1. (1)

   FCA staff will recommend to the decision maker that a further decision notice be given, either before or after obtaining the person's consent;

2. (2)

   the decision maker will consider whether the action proposed in the further decision notice is appropriate in the circumstances;

3. (3)

   if the decision maker decides that the action proposed is inappropriate, he will decide not to give the further decision notice. In this case, the original decision notice will stand and the person's rights in relation to that notice will be unaffected. If the person's consent has already been obtained, the FCA will notify the person of the decision not to give the further decision notice;

4. (4)

   if the decision maker decides that the action proposed is appropriate then, subject to the person's consent being (or having been) obtained, a further decision notice will be given;

5. (5)

   a person who had the right to refer the matter to the Tribunal under the original decision notice will have that right under the further decision notice. The time period in which the reference to the Tribunal may be made will begin from the date on which the further decision notice is given.

For the purpose of establishing whether the person receiving the further decision notice gives its consent, the FCA will normally require consent in writing.

Sections 393 (Third party rights) and 394 (Access to FCA material) of the Act confer additional procedural rights relating to third parties and to disclosure of FCA material. These rights apply in certain warning notice and decision notice cases referred to in section 392 of the Act (Application of sections 393 and 394). The cases in which these additional rights apply are identified in DEPP 2 Annex 1 by asterisks; these are generally cases in which the warning notice or decision notice is given on the FCA's own initiative rather than in response to an application or notification made to the FCA.

Some of the decisions referred to in DEPP 2 Annex 1 and DEPP 2 Annex 2 share similar characteristics. For convenience, DEPP 2.5 sets out some of these and the particular features they have.

In some circumstances, the decision to give a warning notice and a decision notice in a particular matter will not be taken by the same decision maker. For example, in enforcement cases the RDC might take the decision to give a warning notice, but the decision to give a decision notice could be taken by the settlement decision makers on the basis that the person concerned does not contest the action proposed (see DEPP 5).

FCA staff under executive procedures will take the decision to give a warning notice if the FCA proposes to:

1. (1)

   refuse an application for a Part 4A permission or to refuse an application to cancel a Part 4A permission;

2. (2)

   impose a limitation or a requirement which was not applied for, or specify a narrower description of regulated activity than that applied for, on the grant of a Part 4A permission;

3. (3)

   refuse an application to vary a Part 4A permission, or to restrict a Part 4A permission on the grant of a variation (by imposing a limitation or a requirement which was not applied for or by specifying a narrower description of regulated activity than that applied for);

4. (3A)

   refuse an application to vary a requirement imposed under section 55L of the Act, or to impose a new requirement;

5. (3B)

   exercise its power under section 55L(1) of the Act in connection with an application to the PRA for a Part 4A permission or the variation of a Part 4A permission;

6. (4)

   refuse approved person status;

7. (4A)

   grant a relevant senior manager application, subject to any conditions or only for a limited period;

8. (4B)

   refuse an application to vary an approval under section 59 of the Act that was granted subject to conditions;

9. (5)

   refuse an application for a small e-money issuer certificate (see ELM 8 (Small e-money issuers));

10. (6)

    [deleted]

If no representations are made in response to a warning notice proposing the action set out at DEPP 2.5.3 G within the period specified, a decision notice will be given accordingly: see DEPP 2.3.2 G (Default procedures).

If representations are made in response to a warning notice proposing any of the actions set out at DEPP 2.5.3G, then FCA staff under executive procedures will take the decision to give a decision notice.

FCA staff under executive procedures will take the decision where the FCA is proposing or deciding to:

1. (1)

   refuse its consent to the granting by the PRA of an application for a Part 4A permission, or give its consent subject to conditions;

2. (2)

   refuse its consent to the granting by the PRA of an application for the variation of a Part 4A permission, or give its consent subject to conditions; or

3. (3)

   refuse its consent to the granting by the PRA of an application to perform a controlled function, or give its consent subject to conditions.

FCA staff under executive procedures will take the decision to give a supervisory notice exercising the FCA's own-initiative powers (by removing a regulated activity, by imposing a limitation or requirement or by specifying a narrower description of regulated activity), including where the action involves a fundamental variation or requirement (see DEPP 2.5.8 G).

FCA staff under executive procedures will be the decision maker when a firm agrees not to contest the FCA's exercise of its own-initiative powers and when the exercise of the FCA’s own-initiative powers is contested by a firm.

Any decision made by FCA staff under executive procedures to give a supervisory notice exercising the FCA’s own-initiative powers (by removing a regulated activity, by imposing a limitation or requirement or by specifying a narrower description of regulated activity) which involves a fundamental variation or requirement (see DEPP 2.5.8G) will be taken by a member of FCA staff of at least Director level (which may include an acting Director).

A fundamental variation or requirement means:

1. (1)

   removing a type of activity or investment from the firm's permission; or

2. (2)

   refusing an application to include a type of activity or investment; or

3. (3)

   [deleted]

4. (4)

   imposing or varying an assets requirement (as defined in section 55P of the Act (Prohibitions and restrictions)), or refusing an application to vary or cancel such a requirement.

FCA staff under executive procedures will take the decision under section 63ZB of the Act to vary an approval given to an SMF manager (by imposing a condition, varying a condition, removing a condition or limiting the period for which the approval is to have effect).

FCA staff under executive procedures will be the decision maker when all of the interested parties (as defined by section 63ZC(6) of the Act) agree not to contest the FCA’s exercise of its power under section 63ZB of the Act and when the exercise of such powers is contested by any of the interested parties (as so defined).

The FCA’s statement of policy on the use of the power to vary an SMF manager’s approval on its own initiative is set out in DEPP 8.

FCA staff under executive procedures will take statutory notice decisions relating to the discontinuance of listing of securities on the FCA's own initiative.

If securities have matured or otherwise ceased to exist the FCA will remove any reference to them from the official list. This is a purely administrative process, and not a discontinuance of listing in the sense used in Part 6 of the Act.

Decisions relating to imposition of limitations or other restrictions of sponsors and primary information providers.

Under section 88(4)(aa) of the Act, if the FCA proposes to impose limitations or other restrictions on the services to which a sponsor's approval relates, it must give him a warning notice. If, after considering any representations made in response to the warning notice, the FCA decides to impose limitations or other restrictions on the services to which a sponsor's approval relates, it must give him a decision notice. FCA staff under executive procedures will take the decision to give the warning notice and decision notice where the sponsor has requested or otherwise agrees to the limitation or other restriction and where the sponsor contests the imposition of the limitation or other restriction.

If the FCA is proposing or deciding to refuse a sponsor's application for the withdrawal or variation of a limitation or other restriction on the services to which a sponsor's approval relates under section 88(8)(d) of the Act, the decision maker will be FCA staff under executive procedures.

Under section 89P(5)(b) of the Act, if the FCA proposes to impose limitations or other restrictions on the dissemination of regulated information to which a primary information provider's approval relates, it must give him a warning notice. If, after considering any representations made in response to the warning notice, the FCA decides to impose limitations or other restrictions on the dissemination of regulated information to which a primary information provider's approval relates, it must give him a decision notice. FCA staff under executive procedures will take the decision to give the warning notice and decision notice where the primary information provider has requested or otherwise agrees to the limitation or other restriction and where the primary information provider contests the imposition of the limitation or other restriction.

Under section 89P(9)(d) of the Act, if the FCA is proposing or deciding to refuse a primary information provider's application for the withdrawal or variation of a limitation or other restriction on the dissemination of regulated information to which a primary information provider's approval relates, the decision maker will be FCA staff under executive procedures.

FCA staff will usually inform or discuss with the person concerned any action they contemplate before they recommend to FCA staff under executive procedures that the FCA takes formal action. The FCA may also be invited to exercise certain powers by the persons who would be affected by the exercise of those powers. In these circumstances such decisions, including those referred to in DEPP 2.5.13G, will be taken by FCA staff under executive procedures if the person concerned has agreed to or accepted the action proposed and if the proposed action is not agreed.

The decisions referred to in DEPP 2.5.12 G are:

1. (1)

   the decision to give a supervisory notice pursuant to section 259(3), (8) or 9(b) (directions on authorised unit trust schemes); section 268(3), 7(a) or 9(a) (directions in respect of recognised overseas schemes); or section 282(3), (6) or (7)(b) (directions in respect of relevant recognised schemes) of the Act;

2. (1A)

   the decision to give a supervisory notice pursuant to section 261Z1(3), (8) or (9)(b) (Procedure on giving directions under section 261X or 261Z and varying them on FCA's own initiative) of the Act;

3. (1B)

   the decision to give a supervisory notice pursuant to section 271M(3), (6) or (7) of the Act;

4. (2)

   the decision to give a warning notice or decision notice pursuant to section 280(1) or (2)(a) (revocation of recognised investment scheme) or section 282B (public censure) of the Act;

5. (3)

   the decision to give a supervisory notice in accordance with regulation 27(3), (8) or 9(b) of the OEIC Regulations;and

6. (4)

   the decision to give a warning notice or decision notice pursuant to regulation 24 or regulation 28 of the OEIC Regulations.

7. (4A)

   the decision to give a warning notice or decision notice pursuant to section 255 or 260 of the Act;

8. (4B)

   the decision to give a warning notice or decision notice pursuant to section 261V or 261Z2 of the Act;

9. (4C)

   the decision to give a warning notice or decision notice pursuant to section 271N(2) or (3), or 271R(3) or (4)(a) of the Act.

10. (5)

    [deleted]

11. (6)

    [deleted]

In determining whether there is agreement to or acceptance of the action proposed, an indication by the following persons will be regarded as conclusive:

1. (1)

   in relation to an authorised unit trust scheme, the manager and trustee;

2. (1A)

   in relation to an authorised contractual scheme, the authorised contractual scheme manager and depositary;

3. (2)

   in relation to an ICVC, the directors and the depositary;

4. (3)

   in relation to a recognised scheme, the operator and, if any, the trustee or depositary.

A decision to give a warning notice or decision notice refusing an application for an authorisation order declaring a scheme to be an AUT, ACS or ICVC or an AUT, ACS or ICVC to be a money market fund will be taken by FCA staff under executive procedures, including if the application is by an authorised fund manager who is not the operator of an existing AUT, ACS or ICVC.

The FCA expects to adopt a procedure in respect of notices under enactments other than the Act which is similar to that for statutory notices under the Act, but which recognises any differences in the legislative framework and requirements. DEPP 2 Annex 1 and DEPP 2 Annex 2 therefore identify notices to be given pursuant to other enactments and the relevant FCA decision maker.

Some of the distinguishing features of notices given under enactments other than the Act are as follows:

1. (1)

   [deleted]

2. (2)

   [deleted]

3. (3)

   Friendly Societies Act 1992, section 58A: The warning notice and decision notice must set out the terms of the direction which the FCA proposes or has decided to give and any specification of when the friendly society is to comply with it. A decision notice given under section 58A(3) must give an indication of the society's right, given by section 58A(5), to have the matter referred to the Tribunal. A decision notice under section 58A(3) may only relate to action under the same section of the Friendly Societies Act 1992 as the action proposed in the warning notice. A final notice under section 390 of the Act must set out the terms of the direction and state the date from which it takes effect. Section 392 of the Act is to be read as if it included references to a warning notice given under section 58A(1) and a decision notice given under section 58A(3).

4. (4)

   The FCA is only required to give a single supervisory notice under Regulations 28 and 36 of the MiFI Regulations. No representations can be made to the FCA after the issuing of this notice, but the matter can be referred to the Tribunal.

5. (5)

   The decision to give a written notice under section 55XA(1) of the Act will be taken by FCA staff under executive procedures. If the applicant decides to seek a review, by the FCA, of that decision, they can make representations to FCA staff under executive procedures. If FCA staff under executive procedures then decide under section 55XA(5) of the Act to confirm the first decision, or take a different decision of the type described by section 55XA(1) of the Act, it must give the applicant a written notice.

6. (5A)

   The decision to impose or vary a direction under regulation 74C of the Money Laundering Regulations will be taken by FCA staff under executive procedures, including if the direction involves a fundamental imposition or variation. FCA staff under executive procedures will be the decision maker when a cryptoasset business does not contest the direction and when the direction is contested by a cryptoasset business. A fundamental imposition or variation of a direction means:

   1. (a)

      preventing a cryptoasset business from undertaking cryptoasset business; or

   2. (b)

      imposing or varying a direction in relation to the cryptoasset business’ assets, or refusing an application to vary or cancel such a direction.

7. (6)

   CRA Regulation: Where the FCA is exercising its powers to refuse an application for registration under articles 16 or 17, or to refuse an application made by a credit rating agency to withdraw its registration under article 20(3), it must give a written notice in accordance with article 18(2). In these circumstances the decision to give a written notice under article 18(2) will be taken by FCA staff under executive procedures.

   Where the FCA is exercising its powers to withdraw the registration of a credit rating agency on the FCA’s own initiative under article 20(1) or (2), or to give a direction under article 24(1), it must give a written notice in accordance with article 18(2). In these circumstances the decision to give a written notice under article 18(2) will be taken by FCA staff under executive procedures.

   Upon receipt of a written notice under article 18(2) the credit rating agency may decide to seek a review or to refer the matter directly to the Tribunal under article 18A.

   If the credit rating agency decides to seek a review of the decision set out in the article 18(2) notice, they can make representations to FCA staff under executive procedures. If FCA staff under executive procedures decide to maintain the original decision, the credit rating agency may refer the decision to do so to the Tribunal.

8. (7)

   Trade Repositories (EU Exit) Regulations: Where the FCA is exercising its powers to refuse an application for registration of a trade repository under article 58 of EMIR or to refuse an application made by a trade repository to withdraw its registration under article 71(3) of EMIR, it must give a written notice in accordance with article 71a(6) of EMIR. In these circumstances the decision to give a written notice under article 71a(6) will be taken by FCA staff under executive procedures.

   Where the FCA is exercising its powers to withdraw the registration of a trade repository on the FCA’s own initiative under article 71(1) or (2), it must give a written notice in accordance with article 71a(6). In these circumstances the decision to give a written notice under article 71a(6) will be taken by FCA staff under executive procedures.

   Upon receipt of a written notice under article 71a(6) the credit rating agency may decide to seek a review or to refer the matter directly to the Tribunal under article 71b.

   If the trade repository decides to seek a review of the decision set out in the article 71a(6) notice, they can make representations to FCA staff under executive procedures. If FCA staff under executive procedures decide to maintain the original decision, the trade repository may refer the decision to do so to the Tribunal.

9. (8)

   The Securitisation Regulations 2024: where the FCA exercises its powers to refuse an application for registration of a securitisation repository under regulation 16, or to refuse an application made by a securitisation repository to withdraw its registration under regulation 19(3), it must give a written notice in accordance with regulation 20(5). In these circumstances, the decision to give a written notice under regulation 20(5) will be taken by FCA staff under executive procedures.

   Where the FCA exercises its powers to withdraw the registration of a securitisation repository on its own initiative under regulation 19(1) or (2), it must give a written notice in accordance with regulation 20(5)(b). In these circumstances, the decision to give a written notice under regulation 20(5)(b) will be taken by FCA staff under executive procedures.

   Upon receipt of a written notice under regulation 20, the securitisation repository may decide to seek a review or to refer the matter to the Tribunal. If the securitisation repository decides to seek a review of the decision set out in the regulation 20 notice, they can make representations to FCA staff under executive procedures. If FCA staff under executive procedures decide to maintain the original decision, the securitisation repository may refer the decision to do so to the Tribunal.

10. (9)

    Securities Financing Transactions Regulation (as amended by the SFTR (EU Exit) Regulations): where the FCA is exercising its powers to refuse an application for registration of a trade repository under article 7 of the Securities Financing Transactions Regulation or to refuse an application made by a trade repository to withdraw its registration under article 10(3), it must give a written notice in accordance with article 10a(6). In these circumstances the decision to give a written notice under article 10a(6) will be taken by FCA staff under executive procedures.

    Where the FCA is exercising its powers to withdraw the registration of a trade repository on the FCA’s own initiative under article 10(1) or 10(2), it must give a written notice in accordance with article 10a(6)(b). In these circumstances, the decision to give a written notice under article 10a(6)(b) will be taken by FCA staff under executive procedures.

    Upon receipt of a written notice under article 10 the trade repository may decide to seek a review or to refer the matter directly to the Tribunal under article 10b.

    If the trade repository decides to seek a review of the decision set out in the article 10 notice, they can make representations to FCA staff under executive procedures. If FCA staff under executive procedures decide to maintain the original decision, the trade repository may refer the decision to do so to the Tribunal.